Weekly Cotton Market Review – USDA

The Cotton Ginning Cost Share (CGCS) program was announced on March 3, 2018 by U.S. Secretary of Agriculture, Sonny Perdue. The CGCS program will assist cotton producers in expanding and maintaining the domestic marketing of cotton. The program is administered by the Farm Service Agency and the sign-up period begins on March 12, 2018 and ends on May 11, 2018. Producers were encouraged by the announcement.

Average quotations were 188 points higher than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton and Tobacco Program. Quotations for the base quality of cotton (color 41, leaf 4, staple 34,mike 35-36 and 43-49, strength 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 80.48 cents per pound for the week ending Thursday, March 8, 2018.

This is the highest weekly average since week ending May 22, 2014, when the average was 82.11. The weekly average was up from 78.60 last week and 74.84 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 78.92 cents Friday, March 2 to a seasonal high of 82.16 cents Monday, March 5.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended March 8 totaled 49,573 bales. This compares to 74,941 bales reported last week and 36,009 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,603,021 bales compared to 1,422,912 bales the corresponding week a year ago.

The ICE May settlement prices ended the week at 85.12 cents, compared to 81.81 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was inactive. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive.

Mostly sunny to cloudy conditions prevailed across the lower Southeast during the period, and breezy conditions accompanied a cold front, which entered the region early week. Variable daytime high temperatures were observed in the 70s to mid-50s. Scattered shower activity brought light-to-moderate precipitation to some areas. Rainfall totals measured from trace amounts to around one-half of an inch in localities from the Gulf Coast to north Alabama and throughout portions of central Georgia.

Similar conditions prevailed across the upper Southeast during the period with daytime high temperatures in the low 60s to low 50s. Areas across the Carolinas and Virginia received between one-quarter of an inch to three-quarters of an inch of day-to-day accumulated moisture. Fieldwork was limited.

According to the U.S. Drought Monitor, conditions were generally unchanged. A large swath of moderate drought covered areas across southern Alabama and central Georgia, and another from southeastern South Carolina southwestward through the eastern Florida panhandle. A few gins remained on gin days throughout the region as the last modules of the season arrived at gin yards.

Textile Mill

Domestic mill buyers purchased a moderate volume of 2018-crop cotton, color 41, 42, and 51, leaf 5 and better, and staple 34 and longer for November 2018 through March 2019 delivery. Demand was good for color 41, leaf 4, and staple 34 for third and fourth quarter 2018 delivery. Most mills have covered their immediate-to-nearby raw cotton needs. Yarn demand was moderate. Most mills operated five to seven days.

Demand through export channels was moderate. Agents for mills in Bangladesh inquired for a moderate volume of 2018-crop cotton, USDA Green Card Class, color 21, leaf 3, and staple 36 for November 2018 through March 2019 shipment. Representatives for mills in Vietnam inquired for a moderate volume of 2018-crop cotton, USDA Green Card Class, color 31, leaf 3, and staple 36 for fourth quarter 2018 through first quarter 2019 shipment.

Trading

No trading activity was reported.

South Central Markets Regional Summary

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was slow. No forward contracting was reported. Cotton was being delivered to fulfill contracts.

Typical spring-like weather prevailed during the period. Thunderstorms early week resulted in up to 1 inch of rain to the Memphis territory, after which skies were sunny with daytime temperatures in the 60s. A cold front late week brought overnight temperatures in the 30s. River flood warnings and flood watches remained in effect throughout the region.

Producers attended the Mid-South Farm and Gin Show in Memphis, TN and the Agricultural Outlook meeting on March 2-3. According to the U.S. Drought Monitor, adequate soil moisture levels exist throughout the region. Producers considered their planting options and booked seed accordingly.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts, but some warehouses reported a shortage of trucks was causing delays in getting shipments out in a timely manner.

Thunderstorms early week resulted in up to 2 inches of rain throughout the region. Clear skies returned late week and daytime temperatures reached into the mid-70s. Overnight lows were in the 40s. According to the U.S. Drought Monitor, adequate soil moisture levels exist throughout the region. Producers considered their planting options and some purchased seed to meet their needs.

Trading

North Delta

A moderate volume of CCC-loan equities traded for around 30.00 cents per pound.

South Delta

No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was slow. Foreign inquiries were moderate to heavy. Interest was best from China, Bangladesh, and Turkey.

Planting was interrupted by a beneficial thunderstorm mid-week in the Rio Grande Valley. Daytime temperature highs were in the upper 60s to upper 80s, and the overnight lows were in the mid-50s to low 60s. Planting was underway in Cameron County. Storms throughout the reporting period brought several light rains to south Texas, with the heaviest amounts in the Coastal Bend.

The rainfall will be beneficial for seed germination for cotton, corn, and sorghum. Fields were saturated in the northern Blackland Prairies and more rainfall was in the nearby forecast. Planting of all crops has been delayed until soils firm. In Kansas, winds up to 60 miles per hour interrupted ginning. A bur fire was reported.

Modules were transported from fields to the gin yards. Field preparations were sluggish waiting for modules to be moved. Gin yards were near capacity. In Oklahoma, fertilizer and compost were spread. Ginning continued.

West Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was good. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were moderate to heavy. Interest was best from China, Bangladesh, and Turkey.

Windy, dry conditions prevailed with daytime temperature highs in the low 50s to 80s, and nighttime lows in the mid-20s to mid-50s. Field activities were limited because of high winds. Fertilizer was applied and some had begun to irrigate. Stalks were shredded. Wildfires were reported in several counties. Gin fires remained a concern. Fields were in need of moisture ahead of planting corn and sorghum; cotton is usually planted afterwards once the soils warm.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was moderate. Supplies and producer offerings were light. Demand was good. Average local spot prices were higher. Producers inquired for contracts as ICE December futures reached 78.00 cents in the period. Some contracts were signed. No domestic mill activity was reported. Foreign mill inquiries were steady.

Sources reported freeze damage to early-planted cotton in Yuma, AZ. Replanting was necessary. It was estimated that approximately 40 percent of the crop was planted, but some of that will have to be replanted. As temperatures rose higher in the period, replanting and planting advanced. Ginning continued in central Arizona. Fieldwork was active in the DSW.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were light. Demand was moderate. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Over one and one-half inches of beneficial rainfall was received in the central Valley over the weekend. Statewide, the California Department of Water Resources estimated that the snowpack holds 10 inches of water equivalent or 37 percent of normal for this time of year. Much more snow is needed to replenish state water supplies. Planting can begin on March 10, but soil temperatures were below optimal for planting.

American Pima (AP)

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light and mostly for 2018-crop cotton. Shipper’s prices were firm.

Temperatures were in the 60s and 70s in the Far West. No rainfall was recorded for Arizona, New Mexico, and El Paso, TX. The biggest storm of the season brought welcomed rain and snow into California early in the period. Precipitation amounts of over one and one-half inches were reported throughout the northern and central San Joaquin Valley.

The Sierra Nevada Mountain range received 4 to 6 feet of fresh snow, but some locales received higher amounts. Ginning was completed in California late in the period, but one Arizona gin had modules to process. Planting activity resumed in Yuma, AZ. Replanting was necessary, due to frost damage from the previous week.

Fieldwork was active across the region. Soil conditions were less than optimal in the San Joaquin Valley of California for planting. A chance of rain was in the nearby forecast.

Trading

Desert Southwest

A moderate volume of color 21 and better, leaf 2 and better, and staple 36 and longer sold for around 50 points on ICE May futures, uncompressed, FOB warehouse.

A light volume of color 21 and 31, leaf 2 and better, staple 36-38, mike averaging 44.7, strength averaging 31.6, and uniformity averaging 81.6 sold for around 85.25 cents per pound, same terms as above.

A light volume of mostly color 42, leaf 4 and 5, mike averaging 37.0, strength averaging 27.4, and uniformity averaging 79.4 sold for around 73.25 cents, same terms as above.

A heavy volume of 2018-crop cotton, color 21, leaf 2, and staple 36 and longer was contracted at around 200 points on ICE December futures.